tv Varney Company FOX Business December 31, 2012 9:20am-11:00am EST
>> all right. look, it's still new year's eve here, but people are ringing in 2013 on the other side of the world, my sons included. the party startening new zealand and australia, auckland, sydney, the first cities in the world to celebrate the new year, i guess new zealand is over the cliff. sydney and japan and australia, and either on the edge of the cliff or just tipped over. all right. that's new year's eveover seas, let's check in on the celebration at home. lauren simonetti from times square, i have only one observation, unless you're drinking heavily, drunk as a skunk you're going to be cold tonight, isn't that right? >> or this morning, i've got my hand warmers over here, my space heater over year, stuart.
>> really? >> in 1917. i'm so glad i wasn't alive then. stuart: a question for you. >> go ahead. stuart: in america we say you have goose bumps when you're very cold. in england we say you're hen-fleshed. are you either this morning? >> i am both, put together. times a hundred. stuart: excellent. >> i look like rudolph with my nose. stuart: may i recommend you wear a hat and i'm losing my hair and-- >> i do, i have a hat with me as well as ear warmers just not for this hit. can i tell you some things going on behind me today? >> no, don't have time, sorry. that's the way it is. >> i was going to tell you about the drunken revellers and their bathroom experiences, i guess you don't want to know. stuart: you should hear what they're saying, no more drunken revellers, no time. wrap up, keep warm, young lady, i mean it. >> thank you very much happy new year to you. stuart: happy new year to you, lauren.
and on thursday, president obama signed an executive order that ends a pay freeze for congress and federal workers that is. as our march this coming here, federal employees will see 1/2% to 1% pay increase and get this, 535 members of congress will also get a raise. so, federal workers, 2 million of them already earn more than the rest of us, they get more. and congress, totally failing to do its job, will also get a raise. about 900 bucks each. do they deserve it? according to the latest rasmussen poll you say, oh, no, scott rasmussen joins us now. all right, scott, i've seen the numbers, 5% think that congress is doing a good or excellent job. that's it? >> that's it. 69% say they're doing a poor job and stuart, i know this is going to be hard to believe, i think those numbers are going to get worse. stuart: really? >> yeah, the reason i say that is we have all of this talk about the fiscal cliff negotiations, that are going to eliminate this middle class tax hike, but the fact is, payroll
taxes are going up. if you make $50,000 a year, you're going to pay a thousand more in taxes so when the president and congressional leaders stand up and say we saved the world, we avoided middle class tax hikes and look at your paycheck, you're going to realize they talk in a different language in washington and people get burned. stuart: i know you've got a poll on the blame game. i'm going to put it up on the screen now. i think it sails 44% will blame the republicans if we go over the cliff and 36% blame the president, scott, i think that's much more narrow than i thought. i thought republicans would overwhelmingly get trashed on this and get all-- >> no, because the republican voters say the president is to blame for everything. if their favorite football team lost it's the president's fault. a good solid base of republicans that have a different way and republican-leaning independents and 50% say both sides are to blame and the cynicism is unbelievable. they just, you know, right now
57% of americans think their own representative in congress trades votes for cash. stuart: for cash. >> they just don't trust them. yeah, they think this whole situation has gotten out of control and the reason these guys get reelected in the public view is because the system is rigged to benefit incumbents. so there is cynicism piled upon cynicism. last time government spending went down was 1954 and people are fed up. stuart: it's possible at some point in the future, you can get elected to public office in america saying i'm going to cut that because we can't afford it. but it's a long way off, i suspect, really a long way off. scott, i'm terribly sorry, i'm out of time. got to get to the stock market opening in a couple of seconds. happy new year. >> and to you. stuart: thank you. the clock is ticking and no matter the outcome of the
>> there is one issue that dominates stock market trading, cold trading, oil trading, you name it, all kinds of trading, one issue and one issue only, that's the fiscal cliff. you can spend a lot of sound bite trading. anybody in any authorities says anything about the likelihood or otherwise of a fiscal cliff deal you will see the market react. it happened earlier this morning. there was a report that maybe these talks between mitch mcconnell and vice-president biden were making some progress. on that, up went the futures market to show a gain of 80 points for the dow. we're back to showing a gain of 50 or 70 points. watch for head lines, for leaks,
for any sound bites that might appear on any news program anywhere and you will have some kind of market reaction. as we countdown to the end of this fiscal cliff, i'm going to call it a debacle because that's exactly what it is. even if we get a very, very narrow deal, whoop-de-doo, we have a debt ceiling problem and amt taxes, government spending, all of those problems outstanding, nothing done. the dow jones industrial average is not done up for the opening bell, it's down, we're 42 points, 48 points going down as of right now. 50 points lower. what did you give, what did you get for christmas this year? chances are, a computer tablet maybe? according to the latest data from cnet, there were 17.4 million tablet activations on christmas day alone, more than double than last year. look at the two leading tablet makers, names that you know, let's start with apple with all of those activations and probably a lot of ipads.
well, apple is languishing just about 500 a share. pnd amazon with a kindle activations there as well. 243 a share, relatively high level and 260's were the high, down two bucks as of now. hours to go, no deal as of now. the fiscal cliff, now, restrain your emotions, please, kelly jane from the weekly standard is here. welcome back. conventional wisdom says that republicans get all the blame for this mess whether we go over the cliff or not, they get the blame. do you agree with that? >> i agree that seems to be the conventional wisdom. i'm not sure that should be though. people forget that it's not as if we didn't see this coming. nobody is blaming the deficit reduction supercommittee and the fact of their failure to have a bipartisan agreement is really what triggered this fiscal cliff in the the first place. stuart: is it a failure of president obama to lead?
i mean, else's the president of the united states of america. we are facing a fiscal crisis right now, an economic crisis, for heaven's sake. shouldn't we expect the president to go a long way towards dealing with this and leading us out of it? and i don't see it, frankly. >> i don't either. and i think his view, honest he isly, he just won an election and so he calls the shots and republicans should just follow along, even though republicans kept their majority in the house and there's a great deal of the country that does not support the way that obama would like to deal with this problem. stuart: look how it's been presented in the establishment media. president obama cutting short his holiday vacation, returning to washington trying to fix the fiscal mess. thank you very much, mr. president. mr. boehner, speaker boehner, oh, he finally gets the house back in session on sunday night. and then we have some democrats
saying, why don't these republicans quit defending their millionaire pals. the way it's presented in the establishment media is highly pejorative against republicans and yet, republicans, as we heard from the rasmussen poll, they're not getting all of the blame. it's 44-36 that's where it is, again, that surprises me. >> those headlines are great. the next time i'm on deadline and i have a story to write. because i've left it to the last minute and i have to cancel a movie i think i'm going to, you know, complain about it and say, oh, finally, i'm getting back into the work session here. no, i mean, it's ridiculous. now, the republicans, i think, are doing one thing wrong though and that is focusing so much on the tax increases on higher earners, i do think that that's one area where obama can claim to have a bit of an upper hand because he made it very clear in his campaign for reelection, that he was going to tax the wealthy, so-called wealthy more. so, i think he has a good argument that he might have a mandate there.
but, everything else, i mean, as you just mentioned if there's going to be a deal, there's going to be a narrow one and pretty much everything in that narrow deal is going to be in the democrat's favor. it's going to be things they want. >> that's all it is, i mean, the way things are shaping up, and from what we are hearing is simply a deal they're discussing a deal which would raise taxes on people making more than a million, or 500,000 or the latest number, 400,000, that's it. i don't know anything else to include. i'm sorry, go ahead. >> no, exactly. we're calling this a fiscal cliff. but really, if there is a deal, it's not going to avert a much bigger one later because any deal that we're talking about here is not going to include -- it's going to include almost nothing on getting spending under control. it's going to have tax hikes and maybe a little bit here or there, but it's not going to address the big issue. any last minute deal is really fw goi is going to kick the can down the road and the democrats with spending.
something has to be done. >> forget the fiscal cliff stuff and forget the debt ceiling stuff. the fact is that tomorrow morning, the tax rate, the social security tax rate on every american who works is going up. the medicare tax rate on high income people is going up. the tax on medical devices tomorrow morning, is going up. forget fiscal cliff. taxes are going up almost across the board. give me a quick comment on that. >> well, you know what? this has got to be the first time ever that it's december 31st and i have no idea what i'm going to be making tomorrow in terms of take home pay. you know, if you're a businessman, how do you decide what you're going to do with your business this year, you don't know how much you're going to be paying in taxes. if you're a consumer, how do you decide what you're spending your money on in the upcoming year. the level of uncertainty, i think, is unprecedented, and the fact that it's gone on this long is-- i mean, it's insane, it's really crazy. outrageous, that's what it is. kelly jane, just stay there for a second, please, i've got to do more business, but i'm going to
bring you back. >> great. stuart: say it isn't so. piers morgan threatens to leave the united states over gun control and i have offered to pay for his ticket. economy class of course, and i will even throw in a stopover in tax happy france. here is how piers morgan puts his threat to leave, quote, i can spare those americans who want me deported a lot of effort by saying this, if you don't change your gun laws to at least try to stop these relentless tidal waves of murderous carnage then you don't have to worry about deporting me. i'll have my take on piers morgan in our next hour or so. clearly, i've got a dog in this hunt, i am english, i'm an immigrant, et cetera, et cetera, and i've got a strong opinion on pierce morgan. let's go back to kelly jane, what do you think of piers, my good fellow. >> is anybody crying about this, is anybody worried that piers morgan is it going to leave? you know, i hate to be -- i hate to be snarky, but i think that
people were very surprised when he got that slot after larry king in the first place and his show has been most successful in giving people things to laugh at the day after. stuart: ooh, that was good, kelly jane. that was really nasty. . [laughter] thank you very much indeed. >> i love the english, i love the english so i'm happy to have more of them in the states, i just think that they might want to read a little about the history of the country to which they're going to, which you obviously have made yourself very aware of it and piers morgan is not. stuart: if you come over here with your hoytty toity accent, like the place, don't talk down to the natives, it's really bad form. love that last comment. see you later. >> thanks, stuart. stuart: president obama says he wants to protect the middle class. come tax time in april those families could owe more. this year. will anything be done to stop this from happening, a new
story. let's go to diane macedo at the new york stock exchange, facebook higher why? >> that's right, stuart, so the fiscal cliff concerns continue. here at the nyse, spirits are high. one of the traders gave me the snazzy glasses and one of the reasons could be facebook. and bmo capital upgraded facebook from underperform to outperform and raised its price target to $32, up from $15. and steeple nicholas raised the price market to $31 up from $26 and looking at facebook shares up 2% this morning and seems like it could be a happy new year for facebook and either way, stuart get these on here, a happy new year to you. stuart: they look pretty good, got to say. >> match the dress. stuart: i heard a comment from the gentleman to your left. >> the gentleman who gave me the glasses, very happy with his donation here. stuart: is he selling those? >> no, free of charge, actually. >> hey, diane, thank you for being here. >> thank you, stuart. stuart: secretary of state
hillary clinton remains hospitalized this morning and has a blood clot related to concussion she suffered earlier this month. that concussion prevented her from testifying at the scheduled benghazi hearings, secretary cliiton is expect today remain in the hospital, it's in new york city, she's going to stay there for probably the next 48 hours and check out the clot. time is money, 30 seconds, here is what else we've got for you today. rich people voted for president obama, yes, they did and now their taxes are going up. are they happy now? our voice from the rich has the answer coming up. speaking of the president, where is the leadership? kirsten powers is democrat who i think is drifting away from the obama camp. she will be joining us a little later. and a new year brings new hope for the formerly golden state of california, the chairman of the state's republican party, yes, there is such a thing, as a republican party in california, i think. join us. remember, we want to hear from you please, send your e-mails right now firstname.lastname@example.org, we'll read some of them on the air as
we go through this new year's eve. 7 early movers, where are we to start with. amazon, that stock is up 41% this year. the company says one of its directors is resigning and it's down 19 cents, that's it. 2.44 on amazon. electronics firm brady corporation acquired precision dynamics from the private equity owner, 300 million in cash, little change. private equity to buy financial advisory firm dustin phelps, 665 million bucks and phelps is not surprisingly up a lot. and netflix chief hastings gets his pay doubled, but half is died to the company's stock performance, netflix up 28% this year up a little more right now. fda approval made by, for a bill. made by bristol-myers and pfizer to prevents strokes. here is a look at shares of bristol-myers, a good looking drug for them and the stock is up. now look at pfizer, please, and they, too, are i think--
no, down a little bit. on change. and s&p cuts conagra to near junk status on a deal. it's down. dow industrials now dead flat. here we go again. dead flat, that is sound bite trading. any word of these fiscal cliff discussions, the market will move. housing, a bit of a bright spot in the economy, but if we fall off the cliff, that could end. if lawmakers can't reach a deal nearly every working american will face higher tax rates and we'll deal with both issues next.
>> well, we're flat. down four points, all we've got. we're below 13,000 all waiting for any news on fiscal cliff developments. we'll keep you up-to-date. venezuela's president, hugo chavez is suffering new complications from a respiratory infection that just three weeks after undergoing surgery for cancer in cuba. chavez has not been seen or heard from since his fourth cancer related surgery which took place earlier this month. government officials say chavez might not return in time for the inauguration of his new six-year
term on january the 10th. okay. check the price of oil, they're not related. the situation concerning hugo chavez is not related to the overall price of oil which this morning is at $90 a barrel, it's down 28 cents. now, one of the bright spots in this economy is the housing market. there has been a modest recovery in prices and the number of homes sold. however, if we go over the fiscal cliff, or if we completely fail to reach a broad ranging agreement, this is what our guest from forbes magazine, morgan brennan, said would happen to the housing market, again, if we go over the cliff. listen to this. >> i do think that will create a prolonged bounce along the bottom. i think we could see downward pressure on price, i think we could see tax cuts that are going to expire as the mortgage forgiveness relief act is the big one i'm worried about. >> to summarize, she's sailing, look, the situation in house something a nice recovery buff
if we don't in the end get a broad ranging agreement. >> and gilmo morales. >> and you don't-- >> and i've been saying for a while here, a single family home in a good neighborhood is probably one of the best investments you can make, you can live in this thing and tax advantages. would you apply your trading skills and the analysis to the single family home market assuming we go over the cliff? go. >> i think we've been seeing lately is some housing stocks, funnies ryland group, for examples has acted well and you see them rallying, a lot of this has been a dead cat bounce, while i think owning a home and everybody should own their home and seek to pay it off to have that asset, i don't necessarily believe that we're going to return to the bubble era that we saw back in mid 2000 from the housing sector although you're seeing some of the stocks, but i think this is mostly a dead cat
bounce and at some point, it will run its course and if we go over the fiscal cliff, it will bring that in a lot faster. >> very interesting, gill. stay there for a second because i want to run a sound bite from al on our program last friday talking about the taxes which are going to go up if we go over that fiscal cliff. here is a full listing, go. >> on income tax, you currently have six brackets that range from 10% to 35%, we're now going to go to 5 brackets that range from 15% to 39.6%. and so, compression of brackets, higher rates. >> and so, there you have it. we go over that cliff, everybody who pays federal income tax now will pay more as of tomorrow morning. how does that affect you trading stocks and gold? >> well, i believe the markets tend to discount these things ahead of time so we've seen some weakness recently in consumer stocks and retail stocks and some of those have actually been short sale targets of mine and a
stock like apple coming off its peak severely so i think that the market is discounting the potential for higher taxes and for more regulations regardless whether we go over the fiscal cliff or not. to tell you the truth, stuart, i tended to look at the fiscal cliff thing really providing an ali alibi. and even if we saw the fiscal cliff, i don't think that's going to get us out of the woods in terms of the overall economic malaise that we've been in, i think you will likely see the market head lower next year regardless what happens today or over the next few days regarding the fiscal cliff. >> that's interesting. what would you be buying? i know you're a trading kind of guy, you're looking for dips, looking to buy on dips. >> right. >> what would you buy? >> well, there's nothing that i see that's attractive right now. i'm actually short the market and what i would like to see, to tell you the truth, a little rally caused by resolution of the fiscal cliff. there may be some stop gap measure, i think that the market will cling to that as a reason to stay the short-term rally and looking to sell stocks and short stocks into that rally.
so i'm not really interested in buying some stocks right at this moment to tell you the truth. >> that's interesting. i just want to try to summarize for our general interest >> right. but you say it's not going to last. the underlying economic situation is bad, down we go on the stock market at some point, fairly soon. is that accurate? >> yeah, yeah, and i think you're seeing that in a lot of the stocks, in a lot of the underlying leadership that was leading market previously this year and seeing stocks like apple and others, like priceline, intuitive surgical, just break down you've seen some of the biotechs break down and telling you that under the hood the market is weaker than one might think based on the rally of last month. stuart: gil morales, always a pleasure. happy new year to you. >> take care. stuart: of the price of gold this morning, 1,663.50 an ounce.
we're up 7 bucks as of right now. here is a story for you. sanity on taxes. a high court strikes down president hollande's plan for a 75% tax on millionaires, but not so fast. if the socialists get their way that tax will be coming back with a vengeance. david asman is here, taxes, always one of his favorite subjects, especially taxes on the rich. come in, david. ♪
reported moments ago by mike emanuel of fox news, no impact on the market. i've got a little bit-- wait for it a little bit of tax sanity from france. and struck down hollande's proposal 75%. and somewhere in belgium gerard depardieu is feasting on cheese with a grin on his face. they'll meet the court's standings. why are you laughing, david? >> it's a tale of two cities, can you imagine 20 years ago thinking that paris would be getting less socialistic while d.c. would be becoming more socialistic? >> it's not-- >> it's slightly a wee bit less socialist the french court says that tax infringes on the principle of equality before public-- >> can i explain that? the french court said in a household where you've got two income earners, both of whom
make just under a million euros each, that household would not pay the 75%. >> what i like about, because stuart varney, a brit, has to describe in plain english what a french legal decision really means because it's not explanatory enough on its own. stuart: as i was saying the french court said it's unfair to the households where two individuals they have-- >> the french are trying to obje ow ow owv owvuskate an issue? sacre bleu. >>. stuart: don't swear. >> and they're coming to a conclusion that's going to help this nation? it's going to hurt thisnation, whatever they do it's going to hurt this noigs. stuart: you are with us for the next hour. >> i've got it-- >> and i've just, i have so much
information and this is such a target rich environment what's happening inside the beltway. stuart: excuse me. >> it's only the beginning. stuart: don't want your information, i want your passion and your fire. >> got it. stuart: your angry. >> frustration. stuart: all of them. the trifecta. the fiscal cliff just one tax crisis we're facing. the new at 10 the tax for families are not ready for and the bill is going to be due in april. >> announcer: you never know when, but thieves can steal your identity and turn your life upside down. >> hi. >> hi. you know, i can ve you 15% today if you open up a charge card accounwith us. >> you just read my mind. >> announcer: just one little piece of information and they can open bogus accounts, stealing your credit, your money d ruining your reputation. that's why you need lifelock
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stuart: almost 10:00 eastern time and new at 10:00, we are 14 hours from going over the fiscal cliff. there is no progress to report. certainly no deal on the table. the senate reconvenes in an hour. meanwhile, 28 million families will be thrown into tax chaos. hardships expected for all those people facing higher taxes than expected, come april. we will explain what that tax is all about. check the big board. this is sound bite trading. the moment you get some kind of news from these fiscal cliff discussions, negotiations, you may see a market reaction. not much coming out of the talk so far. therefore, the market is flat. all right, everybody, it is -- what day is it? david: this is monday, december 31st, last day of the year. stuart: here's our company: david asman is with us. diane is joining us from the floor of the new york stock exchange. but first let's go to kirsten
powers. she's with the daily beast in d.c. kirsten, i have to ask you about leadership. now, we've said many times when you have joined us on this program, i think you are -- i hate to repeat myself, but i think you are drifting a little bit away from the leftists in the obama camp. i want to know, do you think that the president has exercised the kind of leadership that we would expect from a president who has just won election? do we see the kind of leadership that you want to see? >> yes. i'm sorry, i'm going to disappoint you here, stuart. i do think he's done exactly what he said he was going to do. he ran on basically on raising taxes on people who make over $250,000, and you might remember that republicans accused him of waging class warfare all through the campaign for doing this, but this is what he ran on. he never ran on cutting the deficit. he talks about it, but it's never been a central part of his plan. stuart: okay. okay. but in a leadership position,
faced with a real crisis and this is a crisis, for heaven's sake, wouldn't you expect some degree of compromise from the president, which he has not done? >> i think he has compromised. stuart: where is the cuts in spending? where is the reform in entitlement systems? they are not there. >> if you want to talk about leadership, i would ask you why have the republicans not put forth really specific cuts? john boehner gave sort of a number, but was not specific about it. marco rubio just tweeted today or yesterday that the social security cuts were off the table. the g.o.p. didn't want them and the president supported them. i really don't think i'm being partisan on this point. i think the republicans are the ones that are lacking the leadership. stuart: kirsten, what you are doing is you are shifting attention. i think we should be focused on the president. granted, public opinion is going to blame the republicans for this failure. that's understood. it is probably going to happen. i want to focus on the president. i don't think he's leading.
>> here's my -- this is a honest question for you, the president never said that this is his central point to governing. the republicans say it is their central point. why aren't the people who say that they are so concerned about cuts offering specific cuts? stuart: it is the president's job, i would have thought, to try to lead america back to prosperity. the plan is -- >> i think that's what he's doing. stuart: no he's not. no, really. you cannot have prosperity in america while you're spending a trillion dollars a year over what you're bringing in, money that you have to borrow. you cannot return to prosperity by more government spending, which has already failed to produce a reasonable growth rate, and you cannot return to prosperity with an ever, ever mounting debt that just goes up and up and up. >> okay. that's a philosophical difference that you have with the president. you're very in line with what the republicans think. so you should expect the republicans to be the ones who are pushing on that. that is not the liberal world
view. if you read paul krugman, he's concerned that we're going to reduce the deficit too quickly. what i'm saying is if i was you, and that's your focus, then i think the republicans -- i would be very upset with the republicans for not making -- what cuts have they offered? stuart: wait a second. what we need more than anything else is growth. >> you're asking the president to be -- you're asking the president to be a republican. that's all i'm saying. it's not what he ran on. it's not what he was elected to do. stuart: -- prosperity, i don't think the president will do that. >> he wants to do that. stuart: it seems to me -- i'm a partisan observer here, he wants a political victory. he wants to beat the republicans over the head and beat them up good, but the country pays the price. that's my problem here, kirsten. >> i don't think that's right. i think that people misunderstand often what goes on in washington. that there are these really serious philosophical differences about what it's going to take to get the country on the right track, and the
president just has a different vision than you do. stuart: as of tomorrow morning, regardless, forget the fiscal cliff, for a second, regardless of that, as of tomorrow morning, every single person in america who works will pay more taxes. the social security tax is going up. okay? every single person who earns over a certain amount of money will pay a higher medicare tax. everybody who uses a medical device will pay a higher price for that medical -- medical device because of a new obama tax. taxes are going up period. is that the way you get growth? what is the president doing about this? all he's standing for is tax increases. that's all he's got. that is not prosperity on the horizon. it is not. >> well, that's not really all he's got though, stuart. i mean look, there are plenty of economists who think that the stimulus helped our economy, helped stave off a great depression. there are a lot of economists who are saying -- looking at next year and saying we're going to see growth, not huge growth, but we're still going to continue to grow. stuart: are you going to defend
that kirsten? do you think the stimulus -- >> yes, i have defended it many times. stuart: it worked to return us to prosperity? and another 50 billion on roads and union pay scales will get us to prosperity, really? >> i think that the stimulus was necessary and without it, we would be in a worst position than we are in. i don't think it was perfect. i don't think it was designed perfectly. i'm not saying that everything was done perfectly, but i do think overall it was the right thing and we are on the right track. i know you are devastated. [laughter] stuart: i was offering you some insurance. i was offering you the chance to get some insurance. i know you appear on special report. you're a wonderful guest with bret baier. >> thank you. stuart: i was offering you the chance so you could perhaps say something a little negative about the administration, so that going forward, when we get into a real financial mess, you will be able to say well back on varney's program way back when i was pointing out the truth. >> i say plenty negative about
the obama administration. stuart: not today though. >> i'm more than covered on that. stuart: kirsten powers, it is always good to have you with us. we appreciate it. >> thank you, good to be here. stuart: thank you very much. on the subject of presidential leadership, we have with us david asman. he's got something to say about leadership. first of all, i want to -- let me roll this sound bite. okay? david: all right, but can i say one thing? you and kirsten both, i have to tell both of you, putting the stimulus in the past. we had an 800 billion dollars increase in spending in 09 because of the stimulus. that level of spending continued in 2010. it increased in 2011. and it increased in 2012. so the stimulus wasn't a one-shot deal my friend. it has continued right along. that level of increased spending has continued with president obama every year since 09. stuart: hold on a second. can we please roll the sound bite of president obama and a trillion dollars worth of cuts.
go. >> if you look at my track record over the last two years, i cut spending by over a trillion dollars in 2011. i campaigned on the promise of being willing to reduce the deficit in a serious way in a balanced approach of spending cuts and tax increases on the wealthy while keeping middle class taxes low. stuart: i think that was from met the press. -- meet the press. david: yes, it was. stuart: the president specifically said i have cut the deficit by 1 trillion dollars. david: he said i cut spending by 1 trillion dollars. stuart: by 1 trillion dollars. is that true? david: not at all. i'm looking in my hand. these are the figures from the department of treasury. spending 09, 3 trillion 500 billion. 2010, 3 trillion 500 billion. 2011, 3 trillion 600 billion. 2012, 3 trillion 538 billion. he has not cut a trillion dollars. where are those cuts?
we just heard kirsten say that he is not campaigning on the fact he is a cutter, yes, he is. stuart: i'm not ttking the president's side. i'm trying to explain what he's saying, it is not that he's absolutely cut spending, he has cut the growth of rate of spending. i agree it is not true. that's what he's saying. it's like the deficit, it is not like he's going to absolutely cut it, he's going to reduce the rate of growth. david: he claimed he was going to cut another trillion dollars in the deal -- senator bob corker by the way he's very moderate, a republican, but he's been dealing with democrats on this, he said yesterday after that interview he said i want to talk to the president find out where this trillion dollars is. where is it? nowhere -- stuart: never been accounted for. david: he's not telling the truth about that and it's time that somebody -- i'm surprised kirsten powers who is an honest person, i'm surprised she didn't peg the president on this because not only is it untrue that he hasn't been campaigning on this, because he is, we saw
it yesterday, he can't say where those cuts are or where they are coming from in the future. i think she let the president get away with it. stuart: the obama administration continues to demonize the rich, still the wealthy voted him for a second term. how is that working out for the rich? no matter what they will end up paying higher taxes. are they happy now? the rich folks? we will talk to the man who wrote the book on the rich. that will come up at 10:35 this morning. that's your tease. stock alert to diane at the new york stock exchange. you have a big winner for us. i want to know what it is. >> that's right. this stock is getting a nice boost this morning on reports that a group of private equity firms have struck a deal to buy the financial advisory and investment banking firm for about 665 million dollars. a 19.2% premium from its friday close. now keep in mind duf and phelps still has until february 8th to find a better deal.
investors seem pretty happy about it. the stock is up almost 20% so far this morning. stuart? stuart: thank you very much. now i want to talk about the huge extra tax bill that will very probably hit everybody. it's called the alternative minimum tax. is that right, elizabeth macdonald? liz: that's right. stuart: unless a fix for the amt is included in any deal which may or may not come out of the fiscal cliff, unless you get a fix now, the alternative minimum tax kicks in full force tomorrow morning. liz: yes. stuart: and will hit millions and millions of people to the tune of 86 billion dollars. liz: correct. that's on top of tax rates going up across the board. so what we're talking about is -- let me just break it down because
>> liz: that $1100 refund could turn into a $1400 tax bill instead. that's a big deal. stuart: there's nothing to stop congress when it reconvenes, the new congress when it reconvenes retroactively saying we've patched it, you don't have to pay. liz: they didn't patch it for 2012. the last time it was patched was in december 2011. so, you know, i don't know what they are doing --
stuart: they could retroactively say -- liz: they could. when you hear h&r block warning this, when you hear the big accounting firms warning this, when you hear the irs saying tax refunds may be delayed, when treasury secretary tim geithner is saying we may have a problematic tax filing season, it is because of things like the amt. stuart: if i think that i may be subject to the amt, i really can't do my tax return until i find out the definitive word. liz: that's right. what we're hearing is you may not be able to do it until march unless all these items get fixed. i'm thinking it will happen. it will get fixed. we are in for a rocky tax filing season. stuart: exactly. it is a mess. the tax filing season is a mess. liz: not just for federal, also for state and local, because they are hinged to the federal system as well. that could be messed up too. stuart: the president wants to tax the rich, wouldn't he want to impose the amt and get 86 billion dollars extra?
liz: out of the middle class. the other point to be made is california is going to get socked the worse so is new york and new jersey because of the way it is structured, according to to h&r block. there are 70 tax breaks expiring that would have helped the middle class too, and they are expiring today. so, you know -- david: can i make a political point? this is why i have said for weeks the president wants to go over the fiscal cliff because then he comes in january 7th or 8th and does all these tax cuts that actually are getting rid of these tax increases so it will be the obama tax cuts instead of the bush tax cuts. stuart: wait a second. we go over the cliff. the republicans get the blame. the president flies in and saying i'm fixing everything. david: and heelowers tax rates. liz: he wouldn't be fixing anything. he would be keeping in place the bush tax rates for the middle class. that's what lost in this debate. the middle class tax rates came from the bush administration. david: that's a great point. liz: more poor people were exempted from taxes under the
bush administration. more poor people were exempted from taxes under the bush administration. that data comes from the nonpartisan congressional budget office. when the bush tax cuts came in, federal revenues came pouring in 30% higher in 01 and 03. stuart: let's not forget that, please. liz, thank you very much indeed. no matter what the outcome on the fiscal cliff, looks like the g.o.p. will end up getting a big proportion of the blame. demonize speaker boehner, celebrate president obama, what do the republican strategists say about that? find out next. music is a universal language. but when i was ian accident... i was worried the health care system spoke a language all its own with unitedhealthcare, i got help that fit my life.
stuart: stocks are dead flat as of right now. futures were higher over a report that maybe some progress had been made on this fiscal cliff thing? but all of that green did not last, right now the dow industrials are up all of 1 point. congressional leaders closing -- so we hear, maybe closing on a deal that would prevent milk prices from doubling next year. key leaders from the house and senate have agreed to a one-year extension of the 08 farm bill which would replace dairy programs that would expire at midnight because that is going to happen.% house republicans though still have to sign off on that extension. probably will. the hobbit taking the top spot at the box-office third week in a row. making it about 32 million dollars for the weekend. it has made 222 million thus far. about 686 million dollars % worldwide since its release.
stuart: not even the irs knows what tax rates will be in 2013. a statement just released by the irs says and i'm quoting directly now, we are aware that employers have questions with respect to 2013 withholding, since congress is still considering changes to the tax law, we continue to closely monitor the situation. we intend to issue guidance by the end of the year. the end of the year is about, what, 13 hours away. we will wait, the irs. dow industrials down 4. congress once again failing to act, and now the clock almost up on the fiscal cliff. let's bring in republican strategist. -- let's bring in a republican strategist. welcome back. >> good to be here. stuart: it looks like the republicans will get quite a bit of the blame regardless of whether we get a deal, no deal, or whether we go over the cliff. i think you will probably agree that short-term they get the
blame. how about long-term >> look, this is obama's game. his game is he needs someone to blame. he had bush in his first term. now he's got the fiscal cliff. blame the republicans. and the truth is, in the short-term, the g.o.p. gets the blame. and they deserve it a little bit. but in the long-term, things change. stuart: you are a republican strategist. why do you say that republicans deserve some of the blame short-term? >> well, they deserve it the same way everyone in washington deserves it. no one in washington is incentiveized to think about the long-term. everyone is thinking about the short-term. by the way we see this in the private sector as well where companies think about, you know, the next quarter and never think about the long-term. the problem is the government gets to kick this can down the road endlessly and it is our cans they are kicking. stuart: if you are a republican and you see a bad policy coming down the pike at you, and you're supposed to compromise with it, namely, raising tax rates on the rich, should you do that just to get along with the other side? just to get a deal? just to get some compromise?
or should you stick with the principles that you were elected to reform? >> i believe you stick with the principles you were elected. people make the comparison of obama's popularity versus the g.o.p. or congress's, that's not the way people vote, they vote for their congressman. their congressman and house sponsor is responsible for them. they were elected by margins bigger than obama's. they are going to hold on to those margins by voting their conscience and their constituents' desires. stuart: you think over the longer term some of the blame will start transferring to the president. what's long-term? >> as soon as we start feeling it in our pocketbooks. stuart: you will tomorrow morning. >> that's right. so, you know, people have been arguing it may not be the end of the world to go over the fiscal cliff. the end of the world is looming. the fiscal cliff is really just a road sign that's telling us we have this disaster coming down the pike. we keep on pushing it away. i'm a little bit glad for all
this over the fiscal cliff, because we need to be afraid. we need to be afraid. it's all out of proportion. stuart: when do we run out of time? i accept the expression kicking the can. i understand thht. how long can we do this for? give me a time frame. >> we have passed the time. in other words, at this point, it is just doing damage control. i don't mean damage control like spin. i mean actual policy to try to undo ome disastrous policies we have. the federal government needs to shrink. the president likes to scare us by telling us that, you know, our education is going to suffer. we're going to be stupid without a large federal bureaucracy running education. that's not true. stuart: when do you think we will come to the day though when in america we really cut back, i mean really cut, the educational bureaucracy, for example, the energy department bureaucracy, anybody's bureaucracy, we have never seen it in the past. >> it is going to happen when it hurts us in our wallets. right now the game is, and this is both sides bear some of the blame, the game is kick the can
down the road. stuart: the democrats and the president will simply blame the rich, they will blame the banks, they will blame wall street. they will blame somebody. >> right. they can do that until the middle class feels it in their pocketbooks. that's what i'm saying. david: the point is all this new tax money that's coming in assuming they get it, it is not going to pay down the debt, it is going to go for more government spending. >> that's right. that's why republicans should stand fast, and that's why they should be against taxes and refocus the message on spending, on government out of control, on ridiculing what really is easy to ridicule, which is observed government programs, observe government overspending, government involvement in every minute aspect of our lives. by the way, we might see a tea party which is really our hope. stuart: it didn't work in the last election, did it? two months ago that point of view was brushed aside. >> yes, that's why we believe the republicans to blame for that as well, not the democrats. the republicans bear the blame for pushing aside their base.
david: their standard bearer in the election was romney, not the tea party. stuart: do you think if a tea party guy has been the republican standard-bearer in 2012, i don't know a name for you, not mitt romney, a tea party guy, do you think that person would have won? david: if he could have drawn the energy from 2010, yes. >> do you think he would have won? >> yes. >> only chance for success in the election and policy. stuart: it just didn't seem like that, did it? a rotten economy and we re-elect a president who is in charge of that are then economy. who could have seen that? i didn't see that coming. >> short-term incentives. you know, it is where the money is in the republican party. it is where the donor base is. the tea party isn't one entity, it is a label given to a movement. stuart: jeff, come join us again as this thing plays out as it will. thank you. >> thank you. stuart: you certainly have
you decide what you are going to be spending your money on in the up coming year? the level of uncertainty i think is unprecedented. stuart: well said, kelly jane, she was in our last hour, what you can expect in the new year if congress doesn't reach some kind of fiscal deal by midnight. we just reported that even the irs is waiting to hear what to tell employers to withhold from our paychecks. we still don't know, what is it, about 14 hours, 13 hours left to go. that's it. all right, everybody, time for a market check. where are we right now? dead flat still with a hint of what might happen on the fiscal cliff negotiations. this is sound bite trading in the extreme. we need to check the price of apple stock and amazon as well. record number of tablets activated on christmas day. 17.4 million. a lot of them would have been ipads and kindles, both those stocks up. apple up nearly 15 bucks. that's 2 1/2%. that's a nice gain there. make no mistake about it, gun control will be a major issue in
the new year. just this weekend president obama vowed that he will make it a priority in 2013. find out exactly what he said on that subject 10:43 this morning. since you are no doubt fiscal cliffed to death and utterly fed up with the antics of our leaders in washington, let me offer a different target. here's my take on foreigners. item one, piers morgan, he's threatening to leave america. he is british. he has been insulting and lecturing americans from his perch on another news channel. if we don't change our gun laws, piers morgan says, he will leave our country. piers, you've made my day. some of us immigrants from britain are tired, sick and tired of you giving us a bad name. i don't care about your opinions. americans don't like being talked down to. i will buy you a ticket to london. i will give you a stopover in paris, which brings us to item two, the french and their 75%
tax. struck down by a french court on the grounds that it is unfair. that's interesting. the court said a household earning more than 1 million euros would not pay the tax. but an individual earning a million would. hence, unfair. we will resubmit and reword the law and when we do, we will catch even more rich people, so there. so to sum up, i wish piers well if he chooses to settle, resettle in britain. i hope he does. but i will absolutely guarantee that he will not extend his stopover in france. not even liberals choose a 75% tax rate.
trading advantage. larry, i'm going to guess that maybe, just maybe, there will be a very very narrow deal announced much later on today. where we just tax people over a certain amount of money and deal with no other issues. if that's the case, what do you think the market reaction is to that? >> i think the market will move higher. i think the market is looking for some kind of deal. i think you are right, it is going to be some kind of mini deal. i was talking to a bunch of traders before i came on, and traders are buying this market. in fact, if you look at the charts over the last several days, every time we hit a low, stuart, we bounce off that low, and so that certainly tells you the traders, your viewers out there, investors, they are buying the market on the lows, this mini deal. stuart: you still have a lot of other issues that are untouched by the narrow deal. social security taxes going up tomorrow. obama care taxes going up tomorrow. if you get a bounce to the market, will it last? >> i don't think it will. i think it will be very short lived. i think people will come in and
sell the bounce, stuart. then they will look at the details and the details won't look good and this market may take a very big hit because of that. it will be short lived as far as i'm concerned. stuart: i'm picking up on very big hit, key words. what do you mean by that, larry levin? >> the market could -- we saw the market overnight in the s&ps trade down to 1380. i think 1350 is the next spot after that. that's another 50 points below where we're trading in the s&ps alone stuart. that's the kind of big hit i'm talking about. stuart: that would be a big hit. larry levin, thank you very much. happy new year to you. >> happy new year to you. stuart: let's bring in the author of how rich people think. steve, the rich voted not in overwhelming numbers but they certainly gave many of their votes to president obama in the last election. now, the rich people in america are going to have to pay higher tax rates. you know the rich. you know all about them. you're with them all the time. you write about them. how do they feel about this?
>> well, i think the bottom line is, stuart, that the rich that voted for obama voted for obama based on his social policies not his fiscal policies. i don't think they are any happen per about the fiscal policies than anyone else, except maybe the very very wealthy, you know, maybe the michael bloombergs and the warren buffetts. stuart: i think there's a distinction here between wealth, accumulated money which you sit on and which is not taxed, and income, tax flow, which is taxed. i think there's a distinction between the two. when i say the rich, i guess i'm primarily referring to wealthy people who have accumulated wealth and they are sitting on it. they don't care if other people pay higher tax rates on their income. that's the group of people that we're talking about, isn't it? >> absolutely. they are showing the ultra wealthy can show very little income, warren buffett is not worried about, you know, someone that has a net worth of let's say less than 5 million dollars pays more taxes, i mean he's got so much money he will never see
most of the money he's got. it is a completely different game. stuart: it is a different game. but now address those people, the strivers of this world who have income on the books, very high income, whether they're sports people or entertainers or whatever it is they do, entrepreneurs, for example, how do they feel about the higher tax rates which are really going to hurt them and many of them actually voted for it? how do they feel now? >> well, i don't think they feel very good at all. i mean i can't find anyone, stuart, who is happy about this situation. of course at this point, right now, hours away from going over the cliff, we don't even know what the rules are. so i don't think people, even people that voted for president obama know what the rules are. so i'm not sure we can really say if they're happy or not because what's -- how can we play a game that we don't know the rules to. stuart: those rich people that you know and that you follow, what are they doing year end tax planning? what are they doing? >> well, i think they are trying to move their money so they are not taxed -- i mean they are transferring their -- what i'm hearing is they're transferring their businesses in their kids'
names to avoid the estate tax. they are doing all kinds of different things. they are taking dividends now instead of later. all different kinds of strategies. again, the wealthy can do these things. what about the family of four making $250,000 a year living in downtown new york who is not wealthy. they are the people who are going to really get hit the worst. stuart: do you know of any wealthy people, i'm thinking of the frenchman who has gone to live in belgium because of the high tax rates. do you know any rich americans that are leaving because of the incoming high tax rates? >> i know a lot of americans who are talking about leaving. the problem is, where do you go? that's the number one conversation i've had with the wealthy, where do we do? everyone seems to have this in their head in some degree. this is the greatest country in the world, i think most of us would agree with that. where do you go? it is a hard question. stuart: what names do they come up with? i'm thinking singapore, cayman islands, switzerland maybe, the
channel islands? >> bahamas, turks and caicos, i'm hearing the same names you are, switzerland, right. stuart: so far they are talking about it, they are not actually doing it yet. >> they are talking about it because they are angry like a lot of us are of the election results nd the debt ceiling and fiscal cliff, and all the things that are going on. where do you go when you live in the best country in the world? it is pretty tough. stuart: you are angry, aren't you? >> i am angry, i am. you know, it's just -- it's a tough conversation to have. i just cannot believe we re-elected president obama. i'm still in disbelief, frankly. stuart: i've heard that from a lot of people. can't believe it happened. but it did. steve, thanks very much indeed. give us a report on what the rich are actually going to do come the new year. thanks, steve. >> thanks, stuart. happy new year. stuart: you have a smile on your face. david: i'm also thinking zab the guy who is making a million bucks a year from his relatively
small business. i know several people like that. they're driving in a 5-year-old, 6-year-old cadillac and they put all of the money they make into their kids' education and their business. that's it. there are a lot of people like that. what are they going to do? they can't cut back on it. they can't send their kids to a cheaper school. they are already enrolled. maybe they will have to do something like that. those are the people that i'm really suffering for. stuart: i think we should make it clear that we're not just referring to taxes going up on upper income people, you also have to consider higher capital gains taxes, higher dividend, interest taxes, medicare taxes. david: i can't imagine it won't have a depressing effect on the market. stuart: medicare tax goes up .9% tomorrow morning for everybody earning 200. david: those costs will be passed on. the cost of the medical equipment will be passed on to the consumer which means another hit for inflation. i think prices will go up for
2013. stuart: we haven't started to talk about estate taxes which will ruin countless people if they go on like this. david: it could be a hit to the real estate market because a lot of people won't want to sell when they factor in all the extra taxes they are going to pay. stuart: not a good situation isn't it? david: i think 2013 is going to be very tough. stuart: all right. gun control, it will be a major issue in 2013, president obama vows to make it a priority in the new year. you can find out exactly what he said on that issue and what to expect on it after this break.
stuart: we have very little movement on the stock market thus far. everybody is watching the fiscal cliff developments. a report some optimism earlier pushed the dow up, now it's stabilized with just a 10 point gain. that's where we are right now. dow is at 12,948. all right, moving on from there, what do we have? netflix, the chief executive
there reed hastings pay doubled, half of it though is tied to its stock performance. peeking of performance -- speaking of performance, the stock is up 29% this year. it was a $70 stock last december. here's something you don't see very often, new year's in north korea. yeah, we bring you the video. north korea's reportedly holding its first ever new year's celebration, fireworks, no less. it is weird that we're actually getting video of the new year's celebration in north korea, but there it is. only on varney & company. ow it , but they' gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy fe together where they almost never fight about money. [ dog barks ] because rightfter they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade.
stuart: we are getting some reports of quote optimism and significant progress in the fiscal cliff talks. let's bring in peter barnes who is close to these talks. what do you make of it, optimism? you're looking away from me. look me in the eyes there. [laughter] peter: getting all the e-mails all of a sudden now. we have got all this optimism, all this significant progress, progress aides close to the talks between vice president
biden and republican leader mitch mcconnell say there is significant progress. some senior republican aide says progress but not done. republican senators express optimism. a senate democratic leader harry reid on his way into the building expressed optimism. stuart: but peter it is only optimism for this super narrow, narrow deal where there's simply a number thrown out there, 400,000 or 500,000 or 250,000 and above that level you pay more tax, below it you don't. that's all it is, isn't it? that's all. peter: yeah, so far. i think that part of the -- part of the head winds, part of the problems with this deal is about all these extra things that we're talking about here, the alternative minimum tax, the 92 billion dollars patch for 30 million people so they don't get caught up in that. and then the medicare fix which is a cut in medicare payments. the sandy flood insurance, emergency supplemental, 60
billion, house hasn't said it will take that up yet. you are right, there's a bunch of other pieces of fruit on the tree that have to be plucked. stuart: may i make a prediction? it is this, you peter barnes will be working until 11:59 this evening. do you think? peter: and happy new year to you too, stuart. [laughter] stuart: i'm serious. i think it is going to go right down to the absolute second. that's what i think. peter barnes, excellent stuff. thank you very much indeed peter. appreciate it. peter: thanks. stuart: president obama vows to make gun control a major issue in the new year. here's the president on meet the press yesterday. >> i've been very clear that, you know, an assault rifle ban, you know, banning these high capacity clips, background checks, there are a set of issues that i have historically supported and will continue to support. >> can you get it done? >> so the question is, are we going to be able to have a
national conversation and move something through congress? i'd like to get it done in the first year. stuart: all right. he'd like to get it done in the first year. do you think that stricter gun control laws are indeed coming? david: i think he's going to push for it. the president has often said about assault weapons, he said you don't need an assault weapon to kill a deer. the 2nd amendment wasn't about killing deers. it was about offending ourselves as best as we can from oppressive government. that's what it was about. if the president can handle that and he can't because everybody who is for banning guns cannot handle that simple easy point. it's become a defense of hunters. the 2nd amendment is not about defending hunters. it is about defending individual rights and defending ourselves from oppressive government. that's what has to be addressed from those people who are against guns. stuart: i think there will be restrictions on so called assault weapons. i think it will happen. david: from 94 to 2004, it did
nothing to bring down violence -- stuart: i'm simply saying that the demand to do something after the connecticut events i think will be sufficient political momentum to make it happen. david: do you think it will be a complete redo with what we had with the first federal assault ban? stuart: yes. david: after that was over, the gun violence came down. stuart: they will make it more strict than the initial assault weapon ban. i think there's the political momentum to get it passed. i think it will happen. i'm not saying it is right or wrong, i take no issue on that, but i think it will happen. david: we will see. if the nra is smart, they will focus on the one particular issue, this is not about having a rifle to kill deers, this is not a deal for hunters. this is a deal for 2nd amendment, for individuals to be able to defend themselves from oppressive government. that's what the 2nd amendment was all about. you may not like it. you may want to change the constitution, mr. president, but go ahead and call for it, this is not about hunters' rights. it is about individual's rights. stuart: david thank you. i'm going to say it, this is an
opinion, california is hopeless. a landslide victory for president obama in november. voters approved higher taxes for themselves, or at least the rich in their state. a statewide carbon tax. coming up next, what's ahead in california in 2013? power consum, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipperverage. t. ro price. invest with confidence. request a prospectus or summary prospectus with investmeninformation, risks, fees and expenses to read and consider carefully before investing.
stuart: all right everybody. let's talk california. it's been another banner year for the formerly golden state. voters approving carbon taxes on business. higher taxes on themselves. and the state overwhelmingly voted for the president in the election. more than 60% of the state voting in favor of president obama for his reelection. let's bring in our next guest. he is chairman of the republican party in california. i'm not being sarcastic but i didn't think the republicans existed in california any longer. you are their chairman, is that correct? >> it is. it was a rough year. stuart: what does 2013 hold in store for california? >> well, actually economically california is going to do worse than probably the rest of the nation. i agree with you, that very little will come out of this. california taxes are on top of the obama care taxes and all the other tax increases.
you will probably see a weak economy which means republican in the state in the legislature need to be ready with reforms and alternatives to the failures of what jerry brown policies will be. stuart: but i put it to you, there is a block of voters, it is a very sizable block of voters in california who don't care about the economy. they don't care about debt. they don't care about it at all. they are involved in totally different separate issues. and that's such a big voting block that you cannot vote them out, can you? >> well, you know, i think that applies to the nation, but i agree there is big trouble when it comes to california, the number of voters that are disconnected from the economic issues, but i think they move front and center eventually because california has 2 million able-bodied people that are not working right now, and at some point they are going to want an answer. stuart: but do they care? they have got all kinds of government programs to support
them. and why should they care? i mean, this is california, la-la land. they are having a great time. the weather is great. the beaches are terrific. why do they care? i'm not being facetious. >> you know what? part of the problem with california is that we republicans are defined by what happens nationally with republicans. and republicans nationally need to get an agenda. recently i wrote in forbes is that what republicans need to do especially now there's no cuts or real cuts that are happening, what republicans need to do is once a month, pass a real reform to a significant government national program, put it on harry reid's desk, go out on the capital steps and hold a press conference and say we're saving you this money. now make them pass this. we need national republicans to show that they are for government reform, and that will help california as well. stuart: you can't do anything inside california, can you? because i think the democrats now have that magic two thirds majority in the legislature. they can do whatever they like,
and you can't do anything about it. >> the legislative republicans right now are in a tough seat. there's a lot of press reports that came out after the election saying that this will only last for two years. if republicans don't get out of the capitol as i suggested for the last two years they need to get outside the capitol and in the district and work with the new voters that are here in california and create an identity and relationship with them, if they do, those are the seeds of recovery. stua: you have a tough job, haven't you? i'm asking sort of a personal question. how do you really feel about this? you are the chairman of the republican party in california which has been devastated at the polls. >> well, you know, over the last ten years, i've done over a thousand events in california, probably over 2500 radio shows. i talk to a lot of people who do care, but what they need is leadership out of the legislative republicans and nationally. they need republicans nationally to show that they are really true about wanting to reform
government instead of going along with this program. so in a lot of ways, it's difficult, but i know there's a lot of good people out there that need leadership. california needs leadership. and i think, you know, look, politics is a pendulum game. the pendulum is going to come back nationally, but republicans need to get out in front with real reforms if they want to come back. stuart: last question, can you give me odds on what i think is the likelihood of california asking for a federal bailout? what is it? 50%? 60%? 20%? what's your judgment? >> well, i think by next july, the deficit -- the state deficit is only going to be about 5 billion dollars, so i don't think you will see it in 2013. but i think the economy will get worse nationally over the next two years for all the reasons you have been talking about. i think it is more likely in 2014 than 2013. stuart: very interesting. tom, i know you have a difficult job, but we really appreciate you coming on the show so often. thanks for joining us. appreciate it. >> happy new year. stuart: to you too.
stuart: this, ladies and gentlemen, is shanghai where they just went over the cliff. three seconds ago. there was something happening. this was not a totally dark picture. well, it is, actually. [ laughter ] just a few moments ago there was activity. the new year 2013 arrived in shanghai. it is not chinese new year. that is in february. over the cliff shanghai. i think i have said enough. roll it, please. the highlight reel. >> i am not saying everything was done perfectly. we are on the right track. >> he needs someone to blame. he had bush in his first term.
now, he has the fiscal cliff. >> he never ran on cutting the deficit. he talks about it, but it has never been a central part of his plan. stuart: how long can we do this for? >> the government gets to kick this can down the road. stuart: please, can we go back to shanghai? i am lightly informed that there is something going on. yes. okay. thank you very much, indeed. the new year has arrived in shanghai. let's just watch it for a second, shall we, david? that is live. if you are an american and you live in shanghai, but you just died, you are in deep trouble because the new estate tax has just goneo